Companies resident in Spanish territory are subject to the payment of the so-called Corporation Tax. This tax is levied on the income of companies and other legal entities such as associations or foundations. The tax can range from 1% to 25%, depending on the characteristics of the company.
Wolters Kluwer has published a guide on the different taxes that the self-employed and SMEs must face and that of Companies is one of them. In this case, the tax is calculated based on the accounting results of the companies.
The Corporation Tax applies mainly to those companies that reside in Spain or that have their registered office or headquarters in Spain. However, there are exceptions, such as the Autonomous Community of Navarra and the Basque Country, which have an economic agreement.
When calculating Corporation Tax, you must take into account the accounting result of the company during the year you want to calculate. A series of adjustments will have to be applied to this result, such as non-deductible expenses or amortizations. Corporate tax adjustments can come from fines, donations or the expense of the Corporation Tax itself, in this case they are non-deductible expenses.
Likewise, amortizations or capitalization reserves, among other assumptions, can also be included in its calculation. Some examples of how to apply these settings are listed in the guide. For example, if a fine has been paid, its amount can be added to your accounting result to obtain the tax base for the year. This will allow the calculation of the full fee to be paid for Corporation Tax.
There are different types of tax in Corporation Tax. The lowest is 1% and applies to companies and mutual funds and bank asset funds. For their part, non-profit entities will have a tax rate of 10%. It is followed by tax-protected cooperatives, with 20%, and newly created entities, with 15%. Finally, the highest tax, 25%, is applied to microenterprises, credit cooperatives, rural savings banks, general insurance mutuals and SGRs, among others.